The Department of Defense may be pondering changes in Defense Base Act coverage March 11, 2009
Posted by Aaron Walter in Uncategorized.Tags: AIG, Defense Base Act Insurance, FECA
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According to a recent Department of Defense posting, it is seeking comments concerning the future of the Defense Base Act insurance system, which in case you are new to this blog, is a workers’ compensation that covers civilian employees working for companies contracting overseas through the Department of Defense.
For now they are seeking input from the insurance industry and from major defense contractors. Eight possibilities for the future of the Defense Base Act have been proposed, but the DoD is open to other alternative recommendations:
- a single-source contract awarded on a competitive basis issued and administered by the DoD;
- a multiple-award contract awarded on a competitive basis issued and administered by DoD;
- o change (i.e., contractors are required to obtain appropriate DBA insurance on their own)
- government self insuring for DBA losses while contracting to the private sector for program administrative and claims processing
- government self insuring with DoD and Department of Labor (DoL) employees performing all administrative and claims processing
- a GSA schedules-type set of maximum rates, which may include awards based on geographic location of the work to be performed and/or based on the nature of the work to be performed, with competition for each major contract (a vehicle structured similar to state-side workers compensation policies)
- a pre-qualified list of DoD-approved DBA carriers and brokers/agents who meet a predetermined set criteria/qualifications to provide DBA insurance from which contractors would be required to obtain appropriate DBA coverage
- contractors self insuring either on an individual basis or by pooling of contractors, including information on how a panel/pool participant would avoid adverse selection
- other alternative recommendations not listed above
Will this mean that AIG may now provide coverage on 100% of all Defense Base Claims?
Will only certain “approved” insurers be allows to offer this insurance and by what criteria will they be allowed to do so?
Or will more insurers get involved in Defense Base Act claims?
Or might it mean that the government could take direct charge and responsibility over this program as they do for direct employees of the federal government (like Postal Workers). Please read this posing on why our federal government taking over Defense Base Act claims and acting as the insurer AND the judge/jury might be a huge mistake.
Aaron Walter
Herb Chestnut
Thanks for an informative website. I wonder what the DBA says about 3rd party actions, ie if you are suing another party(not employer obvisously) and receiving workcomp payments or settlement. There doesn’t seem to be much information out there about that.
Thanks
Great comment and a great topic for a future post. In short, the DBA does not (and cannot) prohibit suits against a third party who is not your employer or, in some cases, an entity who contracts with your employer. That particular subject can become very complicated. However, where the person or entity responsible for your injury is not connected to your employer, there is no prohibition.
There is a right to subrogation and the comp carrier can file a lien on your recovery. Therefore, please get some advice before considering settlement of your third party claim.
We will try to get a post up in the next two weeks.
Herbert Chestnut
I haven’t seen a post from Mr. Chestnut on this yet, but it seems like you could sue the third party and then get the carrier to compromise on its lien. I believe that’s how it works in normal workcomp.
You are correct. Generally the subrogation lien is subject to negotiation and compromise, especially where the result of the trial is uncertain and there are negotiations to settle the third party claim.
Are settlements (like an unscheduled PPD) taxable? And what if I die? Does my spouse continue to get payments.
Hi, I just wetn through this. I think it’s publication 525 from the IRS. Under most cases, your settlement is not taxable and is exempt from creditors as well. Not sure about death benefits for survivors.
Thanks for the input Harold. I am far from a tax expert but I have never known any Workers’ Compensation settlement to ever be taxed in any way.
If you settle your case and recieve payments over time (maybe as an annuity) your estate would recieve them upon your death. If you are recieving PPD benefits, absent a settlement, your death ends your benefits.